House GOP blocks Dems on child taxes as Senate bill emerges

WASHINGTON (AP) — A House committee waded through a fresh pile of amendments Wednesday as Republicans pressed their drive to overhaul the nation's tax system, a day after GOP lawmakers blocked Democrats' efforts to get bigger tax benefits for the cost of raising or adopting children.

As the feverish sprint toward a completed bill by week's end unfolded in the Ways and Means Committee, the Senate's tax bill started to take shape.

That version is expected to completely repeal the federal deduction for state and local taxes, a flashpoint of contention for Republican lawmakers from high-tax states like New York and New Jersey, as well as for Democrats. Concessions were made in the House bill with a partial repeal.

The Senate measure also would retain the medical expense deduction, which the House plan eliminates. And the Senate would keep today's seven personal income tax brackets, not collapse them into four like the House bill.

Republicans hope to garner Democratic support for their politically necessary legislation, which would bring the first major revamp of the U.S. tax code in 30 years. President Donald Trump's top economic adviser Gary Cohn met with Senate Democrats on Tuesday as Trump phoned in from his Asia trip.

Democrats weren't buying Trump's argument that the emerging GOP tax bill is "terrible for rich people." Ohio Democrat Sen. Sherrod Brown said Trump made that claim during the call.

But Brown said the Democrats adamantly disagree, telling reporters, "This bill is clearly overwhelmingly serving the rich." Brown said Trump likes Democratic ideas such as boosting the earned income and child tax credits for working families, but GOP leaders don't seem interested in them.

The Republican-led House Ways and Means Committee voted 23-16 along party lines to reject two Democratic amendments affecting parents. In its second marathon day of amendments and votes on the sweeping, nearly $6 trillion bill, the panel also rolled over other Democratic proposals, including one that would have forced businesses to suffer the same loss of the deduction for state and local taxes as individuals.

The GOP plan calls for repealing the adoption tax credit, a move roundly condemned by Democrats. One of the defeated Democratic proposals would have restored the adoption credit and allowed it to be fully refundable.

The proposal's sponsor, Rep. Danny Davis, D-Ill., said its aim was "so that more families can benefit and more waiting children can be adopted."

Davis said that in 2014, more than 73,000 U.S. households claimed the adoption tax credit, with an average value of $4,802. However, he added, nearly 60 percent of the credit went to families with annual incomes over $100,000.

The GOP plan also includes an increase in the child tax credit, to $1,600 from $1,000 per child — a change championed by first daughter Ivanka Trump — and extends it to families earning up to $230,000 annually. The amendment by Rep. Linda Sanchez, D-Calif., that was defeated would have added a $3,600 credit for families with children under age 6.

Trump and the Republicans need to show the tax bill to voters as a solid legislative accomplishment after a year of failure. At least one House Republican was blunt about the pressure from campaign-money donors to produce. "My donors are basically saying get it done or don't ever call me again," Rep. Chris Collins. R-N.Y., told reporters.

"We know who's watching, we know who you're all catering to today," Crowley lectured Republicans on the Ways and Means panel.

Numerous issues were in play, including the precise levels for a mortgage interest deduction and whether the legislation would serve as a vehicle to repeal the "Obamacare" requirement for nearly all Americans to carry health insurance.

The nonpartisan Congressional Budget Office lowered its estimate Wednesday for how much money repealing the so-called individual mandate would save from $416 billion over a decade to $338 billion.

Republicans have discussed repealing the mandate in their tax legislation to raise money to pay for the tax cuts, but the smaller estimate means they would gain less by doing so. Repeal would save money because without being forced to get coverage, fewer people would sign up for Medicaid or buy federally subsidized private insurance.

Trump has called for repealing the mandate. But with Republicans badly divided over health care, doing so would complicate their tax effort and leaders have so far omitted it.

Republicans are working overtime to present their legislation as a boon to the middle class, citing beefed-up child tax credits and overall decreases in the tax burden across all income levels in the next several years. Democrats call it a gift to corporations and the wealthy, and point to a nonpartisan congressional analysis showing taxes would actually go up beginning in 2023 for some 38 million taxpayers, or families, making $20,000 to $40,000 a year.

The legislation would add $1.5 trillion to an already ballooning national debt. It would deliver a major tax cut to corporations and repeal the estate tax, which would benefit a tiny percentage of the wealthiest families in the country.